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Subsidy Capture in Livestock Risk Protection

Author

Listed:
  • Zhang, Yifei
  • Keller, Andrew
  • Arita, Shawn
  • Steinbach, Sandro

Abstract

Following changes after the 2018 Bipartisan Budget Act, participation in the Livestock Risk Protection (LRP) insurance program expanded rapidly across major livestock commodities. These changes, including higher and tiered premium subsidy rates, substantially reduced producer-paid premiums. At the same time, the interaction between generous premium subsidies and market-based pricing has raised questions related to program design and participation incentives. Because LRP prices and premium rates are derived from futures and options markets, CME option expiration dates provide a natural reference point for comparing the timing of LRP coverage end dates. This analysis examines the distribution of LRP endorsement end dates relative to corresponding CME option expiration dates for fed cattle, feeder cattle, and swine. The results show clustering of insured weight around these reference points for certain commodities and policy sizes. These patterns illustrate the temporal structure of LRP participation, providing context for discussions of purchase timing within the program.

Suggested Citation

  • Zhang, Yifei & Keller, Andrew & Arita, Shawn & Steinbach, Sandro, 2026. "Subsidy Capture in Livestock Risk Protection," ARPC Brief 391392, North Dakota State University.
    • Handle: RePEc:ags:arpcbr:391392
    DOI: 10.22004/ag.econ.391392
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